Background materials on TVET – Volume 1 01 Digital transformation in the informal economy Opportunities and challenges for technical and vocational education and training in development cooperation TABLE OF CONTENTS PREFACE 3 ABSTRACT 4 1 BACKGROUND 5 2 OPPORTUNITIES AND RISKS OF DIGITALISATION FOR INFORMALLY EMPLOYED WORKERS 6 2.1 Global impact of digitalisation on labour markets in emerging economies and developing countries 6 2.2 Influences and significance of new technologies on work in the informal economy 7 3 CURRENT FINDINGS ON SKILLS ACQUISITION AND INNOVATION PROCESSES IN THE INFORMAL ECONOMY 11 3.1 Skills requirements in informal employment due to digitalisation 11 3.2 Routes to acquire skills for informally employed workers 12 4 LESSONS LEARNT AND PRACTICAL EXAMPLES FROM DEVELOPMENT COOPERATION 14 5 RECOMMENDATIONS FOR ACTION FOR TECHNICAL AND VOCATIONAL EDUCATION AND TRAINING IN DEVELOPMENT COOPERATION 18 5.1 Building on scientific findings 18 5.2 Closing knowledge gaps 18 5.3 Rolling out and transferring good examples 19 6 ANNOTATED BIBLIOGRAPHY 20 ENDNOTES 24 2 3 PREFACE The sector project ‘Technical and Vocational Currently, the issue of the future of work is To answer these questions, the sector project Education and Training’ supports the German very important for the future development of TVET issues a publication series. It provides Federal Ministry for Economic Cooperation and German development cooperation, in particular background materials on TVET in development Development (BMZ) in upgrading strategies in TVET. The concern here is on the one hand cooperation which are published on an ad hoc and approaches for technical and vocational with how work and employment are changing basis. Each of these papers examines a specific education and training (TVET) in German and in developing countries and on the other, with aspect of the issues described above. The aim international development policy. By means of the corresponding consequences for TVET in is to compile concise, relevant information, to TVET, BMZ seeks to increase the supply of qual- development cooperation. illustrate this with good practices, and then ified labour in order to contribute to improving to make practical recommendations for both employment opportunities and economic growth. › What kind of employment in which development advice and implementation based sectors calls for what skills? on this. At the same time, promoting TVET as a part of › How must TVET systems be designed to lifelong learning constitutes an important con- The intention is to provide decision-makers cope with these altered requirements and tribution to the ability of individuals for social and practitioners with inspiration for their their continuous change? and political participation. Training geared to own tasks so as to help TVET in development labour-market needs enhances people’s em- › How can vocational training measures be cooperation to respond to the challenges of ployment prospects and enables them to earn a planned and carried out to prepare for new work and to make use of the opportunities decent income to escape from poverty. work in the era of the digital transfor- it affords. mation, and to harness the opportunities afforded by the digital transformation? Female apprentice in industrial mechanics at Umnugobi Polytechnic College, Mongolia. Many girls plan their › The background materials are available in both German and English. career in vocational training. 4 35 ABSTRACT Digitalisation or digital transformation New (digital) technologies have diverse effects There are still a large number of blind spots This volume of background material has been describes first and foremost the technical on the work of those in the informal economy. in research on the effects of digitalisation compiled on the basis of desk research and process of converting analogue values into Technology-based innovation processes in the in the informal economy and in appropriate document analysis. It is divided into five digital formats. However, it also means all informal economy can enhance productivity and effective approaches for TVET in devel- chapters. changes that are triggered by these technical and the working conditions of those who work opment cooperation. Nonetheless, selected processes. ‘Informal economy’ is the term used in the informal economy. The platform economy practical examples are sources of inspiration Chapter 1 offers background information to cover activities by workers and companies, creates new employment opportunities for and provide good ideas for the planning and on digital transformation in the informal who are not properly subject to formal rules. those who work in the informal economy but it implementation of TVET as part of development economy. Nearly 70 per cent of all employees in emerg- can also mean new dependencies and discrim- cooperation in favour of those working in the ing economies and developing countries work ination. Digitalisation requires those who work informal economy. Chapter 2 deals with the opportunities and in the informal economy. in the informal economy to have new skills – risks of digitalisation for those working in the digital skills but also basic literacy. In summary, three recommendations for the informal economy. The digital transformation of labour also has future can be identified: an effect on the extent and quality of em- At the same time, the new media create new Chapter 3 summarises current findings ployment in the informal economy. However, ways for those in the informal economy to ac- › Measures should be grounded in scientific on skills acquisition and innovation processes the forms that these effects take only emerge quire skills: these include FabLabs, MOOCs and findings; in the informal economy. gradually and in each case depend on the m-learning. It is important that each of these › gaps in knowledge should be closed in specific country context. methods facilitates participation by target These are illustrated in Chapter 4 using order to base future action on better groups from the informal economy, in particu- practical examples from development information; lar when it comes to the basic prerequisites cooperation. (skills). › and good examples should be extended and transferred to other contexts. Recommendations for action are derived from these in Chapter 5. This is rounded off by an annotated bibliography. 6 47 1 BACKGROUND Digitalisation is a term with many facets. conditions in the informal economy often do Thesis 9: It is not yet possible to estimate the › How can skills gained in the informal This keyword is not limited to the technical not meet the requirements expected of decent extent to which the digitalisation of labour economy be recognised and certified in process of converting analogue values into work. will affect developing countries. The groups order to lead to more formal employ- digital formats. Digitalisation or digital trans- that are currently the most disadvantaged are ment? formation are the terms used to describe all The digital transformation of labour also has at particular risk of being excluded from the changes that are triggered by these technical an effect on the extent and quality of employ- opportunities of digitalisation. Special meas- › Which approaches and experience already processes, for example in industrial production ment in the informal economy. At this point, ures must be taken here. exist in this respect in industrialised, (Industry 4.0), the world of work (Work 4.0) or however, no definitive answer can be given emerging and developing countries? TVET (TVET 4.0). as to what precise effect the digital change The following questions arise when it comes to Which approaches are already used in will have on the informal economy: it will opportunities and challenges of digital transfor- development cooperation (DC)? Which According to the ILO, the term ‘informal econ- depend greatly on the context of the individual mation for the informal economy: have been proved to be successful? omy’ encompasses ‘all economic activities by country. The position paper ‘New work and its workers and economic units that are – in law impacts on TVET in development cooperation’ › How can stakeholders in the informal › Which recommendations for action in re- or in practice – not covered or insufficiently presented two theses on the opportunities and economy exploit the opportunities offered spect of TVET in DC can be derived from covered by formal arrangements’.1 In emerging risks of digital transformation for the informal by digital transformation? literature and current practice? economies and developing countries, nearly 70 economy.2 per cent of workers are in the informal econ- › What prerequisites are required to omy. At almost 90 per cent it is even more in Thesis 3: There is a close functional interre- prevent the digital divide from becoming sub-Saharan Africa and South Asia. lationship between TVET and the employment wider and to ensure that disadvantaged system that will continue with digital trans- groups also benefit from the digital In these places, the informal economy safe- formation. It follows from this that, although transformation (implementation of the guards employment and income where there digitalisation of TVET promotes digital upskill- principle of ‘Leaving no one behind’ of the are not enough formal jobs, thus allowing ing of employment structures, this cannot be United Nations 2030 Agenda)? young people to enter the labour market. How- forced. This